Mallet and Co. Inc. v. Lacayo

Mallet and Company, Inc. (Mallet) (plaintiff) developed, manufactured, and sold baking-release agents (i.e., lubricants applied to commercial baking pans to ensure consistent release of baked goods). Ada Lacayo and William Bowers (defendants) were longtime Mallet employees with significant knowledge of Mallet’s processes, formulas, equipment-tailoring approach, technical details, and sales and customer information. In 2017, baking-product manufacturer Bundy Baking Solutions (Bundy) (defendant) created the brand Synova (defendant) to manufacture and distribute baking-release agents. Lacayo secretly accepted a position as Synova’s Lab Director while still employed by Mallet. Before and after her resignation from Mallet, Lacayo copied files from Mallet’s database and emailed herself Mallet’s formulas and technical data. Lacayo helped Synova develop release-agent formulas that Synova described internally as “Synova=Mallet” and built Synova’s processes and programs. Bowers shared Mallet’s internal pricing, performance, and customer information with Bundy. Bowers became Synova’s business-development manager and began selling Synova’s products to customers he had serviced at Mallet. The assistance and knowledge received from Lacayo and Bowers made Synova immediately competitive in the baking-release-agent market. Mallet sued Lacayo, Bowers, Bundy, and Synova, seeking injunctive relief for claims including trade-secret misappropriation. The district court entered an injunction order stating that at least some of Mallet’s information in Bundy’s possession satisfied the definition of trade secrets, including information about Mallet’s formulas and how Mallet produced, marketed, and sold its baking-release agents. However, the court did not specifically identify what information constituted trade secrets. The court found that there had been a misappropriation of trade secrets that would irreparably harm Mallet absent injunctive relief and issued a preliminary injunction that, among other things, broadly (1) prohibited the use of Mallet’s confidential, proprietary, or trade-secret information; and (2) imposed a production ban on directly or indirectly formulating, manufacturing, distributing, or selling any products competitive to Mallet’s products. The district court required Mallet to post a $500,000 bond to secure the injunction; Bundy had asked for a bond over $21.5 million. The district court stated that $500,000 was toward the higher end of bonds imposed in similar cases, and $21.5 million was too high in comparison. Bundy and the other defendants appealed.